Accounting · Accounting for Share Capital
Based on corporate rules, consider three statements about share capital: (1) Authorized share capital is the maximum limit established in the Memorandum of Association, requiring formal procedures to amend. (2) Issued capital represents the part offered for subscription (including bonus shares). (3) Subscribed capital is what investors apply for, while paid-up capital is the actual cash realized. Which of the following describes a correct observation about their relationship?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 1 is false because increasing authorized capital always requires a special resolution in all corporate scenarios.
- 2All three statements are correct and together they define the flow of capital from legal authorization to actual cash realization in a corporate entity.✓
- 3Statement 2 is incorrect because issued capital can never include bonus shares.
- 4Only Statement 1 and Statement 2 are correct as Statement 3 incorrectly defines the relationship between subscribed and paid-up capital.
Correct answer
All three statements are correct and together they define the flow of capital from legal authorization to actual cash realization in a corporate entity.
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